Based on our research, we rank the overall quality of finishing of a watch based on 6 different Price Segments. Once that you have determined the Price Positioning that corresponds to your brand’s Dual Attributes, you can use the Distribution Channel model and the Production Cost Breakdown to determine out your Sourcing Cost.
Centralized Sourcing or Decentralized Sourcing
The last option is to determine if you can get more value for your money by letting someone else coordinate the sourcing for you, or of you are better off coordinating it yourself. As a rule of thumb, if the cost of the mechanism represents less than ⅓ of the total cost, we recommend to adopt a Centralized Sourcing model and let the watch manufacturer take care of everything. If the cost of the mechanism represents more than ⅓ AND the total budget per watch is more than USD 30.00, we recommend the Decentralized Sourcing solution.
Centralized Sourcing in China (HK or Mainland China ODM)
|Zero development costs.||Dependance on the ODM's work methods, for example if they are slow, even though they provide the best quality.|
|Contained production costs.|
Decentralized Sourcing in China
|Zero development costs.||Assembly cost (e.g. 2.50 USD).|
|Possibility of MOQ 100 pcs, albeit with a higher cost per unit.||Requires more coordination work from the brand manager.|
Centralized Sourcing in Switzerland (Swiss ODM)
|Worry-free process.||Development cost.|
|High MOQ (1,000 pcs or more).|
|No cost flexibility.|
Decentralized Sourcing in Switzerland
|Zero development cost.||Requires more coordination work from the brand manager.|
|Possibility of MOQ 100 pcs, albeit with a higher cost per unit.|
Protection through logistical obfuscation
Even though Swiss suppliers can be expected to treat Intellectual Property with the utmost confidentiality, we understand the concern about a remote Chinese supplier being tempted to use moulds for another brand.
The tooling of a watch case can require more than 12 different moulds per design, as the forging process must proceed from one mould to the next before getting to the final shape. Those moulds weigh between 10 and 20 lb each, so having them transported out and into the factory might be logistically tricky, let alone exposing them to potential damage.
The most efficient solution that we have found so far is to use Decentralized Sourcing: buying each component from a separate supplier and having them sent to the factory of the proprietor’s choosing. Apart from the assembling factory, who is not into the business of making single components anyway, no other supplier knows what the finished product looks like, and they don’t know where the brand sources the other components.